Shhh! The race to become the global centre of excellence in medical cannabis research and innovation is quietly underway

What’s fascinating to note is that the ingredients required to build a Silicon Valley-style achievement are here in Canada.AFP PHOTO / ALAIN JOCARDALAIN JOCARD/AFP/Getty Images

Canada has the unique opportunity to replicate the entrepreneurial success of the Silicon Valley

Get ready. Get set. Go.

The race to become the global hub for medical research and innovation in cannabis is now on, but it appears that no Canadian city or leading politician has decided to champion this unique opportunity. While some would strongly argue that Israel is miles ahead in this sprint—the Knesset, country’s legislative body, has only recently passed a bill to decriminalize cannabis with fines for those caught smoking cannabis.

As the Canadian provinces prepare to implement their individual (and mostly dissimilar) retail frameworks, the prospect of a leadership position in medical research and innovation in the sector should have already become a cause célèbre for our post-secondary research community and provincial governments looking to diversify their economies.

So why has this not yet happened organically? Is there no economic argument?

The high-level data would suggest otherwise. Simply put, the employment potential (let alone the medicinal benefits) of this burgeoning industry is staggering. A new report by Deloitte suggests recreational sale of cannabis to top $5 billion in 2019 with another $1 billion to come from the medical cannabis sector with projections skyrocketing to $22 billion when edibles are permitted in 2019. A January 2018 Deloitte report also suggested that around 150,000 cannabis-related jobs will emerge with the coming of legalization. To put that into perspective, if true, a new StatsCan labour force tracked industry larger than Canada’s agriculture, utilities, and real estate sectors would be created. That doesn’t take into full account the jobs that multiply from various forms of research and commercialization of ideas.

So how do we compare with our neighbours down South? According to New Frontier Data in the US, the number of people employed by the cannabis industry is set to triple from 200,000 to 630,000 people by the year 2025 and that despite a patchwork of state laws enabling medical and recreational use with a backdrop federal law prohibiting its use, sale and possession which has the effect of keeping the big American banks away, at least for now.

Unique parallels between Silicon Valley and Canada

Theoretically, Canada has, for a period of time, an enormous advantage to attract research capital and the world’s leading sectoral experts. So, if we (Canada, eh!) wanted to do this, how would we do it? One approach would be to look at geographical models of success for other nascent industries—take a look at Silicon Valley for example.

Much has been written about their continued entrepreneurial success. What’s fascinating about it is that the ingredients required to build a Silicon Valley-style achievement are here in Canada. To start, Stanford University played a crucial role in bringing these key ingredients together and has benefited, in many ways, from their entrepreneurial spirit.

If we look at cities that boast a risk-taking culture, talented, diverse, and imaginative students, a community that gives back, abundant capital, collaboration with industry and government support, Vancouver, Calgary, Montreal, and Toronto, come to mind.

Interestingly, the construct of the retail framework will undoubtedly influence where research capital flows. So provincial suitors should take a historical page from Quebec’s playbook when it crafted provincial laws (BAP 15) to attract brand name pharmaceutical research companies to the province and principally to the Montreal area because of its linkages to leading hospitals and universities. Given Quebec’s rather paltry approach to retail, Vancouver, Calgary and Toronto (with a new administration) are now in the hunt.

If, however, a Canadian jurisdiction with the right ingredients doesn’t step up and put a flag in the ground and build a strategy to attract this research community and the entrepreneurship that will come with it, we will see this unique Canadian advantage slip away and likely settle somewhere in California, Washington State, Oregon or Massachusetts. These jurisdictions have the risk-taking cultures and the savoir-faire of supporting entrepreneurial industries. They know how to organize politically, have capital and entrepreneurial hubs, world-class institutions and state governments that know how to work with the private sector.

The final sprint? A city plants a flag within 3 months. But which one remains to be seen.

Jean Lépine is the Managing Director and Regional Partner with BlackShire Capital, a private equity firm uniquely focused on delivering returns from investments in the global cannabis sector. He has worked as a lobbyist with global industry leaders such as HARMAN International, Anheuser Busch InBev, and AstraZeneca, and spent 10 years working with senior government officials and elected representatives at the federal and provincial (Ontario) level.

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